The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Purpose The purpose of this paper is to provide empirical evidence on the relationship between capital structure and technical efficiency (TE) for Italian cereal farms during the 2008–2014 period. Emphasis is given in the understanding of the relationship between the level of financial leverage for cereal farms and their production performance. Design/methodology/approach The methods employed in this research article are based on non-parametric techniques in order to derive TE estimates for a sample of Italian cereal farms based on available Farm Accountancy Data Network data to explore in depth the relationship amongst the financial exposure of the sector and the capacity to utilise an efficient and effective production technology. Furthermore, subsidies are considered in the model as a non-discretionary variable and therefore, as an input that farmers cannot directly influence within the production function. Hence, the non-discretionary Data Envelopment Analysis model is a more appropriate framework since it is not penalising farms at a lower level of Pillar I payments when benchmarked with farms that receive a higher level of payments. Findings The results show that significant improvements could be achieved for most of the farms in the sample by improving production and management practices. Furthermore, results provide an empirical support of the adjustment theory by showing a negative impact of debt to asset ratio to TE. Originality/value This research article provides a first insight on the evolution of the Italian cereal farms debt-TE relationship in periods where high price instability has been observed.

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

No abstract

This paper uses a large database of surveys of household incomes to characterize income underreporting in household surveys in low- and middle-income countries. The objective is to document (a) the extent of this underreporting, and (b) whether and how it varies systematically with respondent, household, income, and survey design features. Drawing on rural household data from 20 developing and transition countries, and using consumption expenditure as a benchmark, results indicate that the observed income/consumption ratios are very small, being on average around 0.76. Results suggest that income underreporting is systematically associated with household and survey characteristics. In particular, the degree of underreporting is strongly associated with the income source, with agricultural income being the component suffering more than any other components from underreporting. The analysis also provides evidence supporting the well-established proposition that underreporting tends to increase with household welfare: richer households appear to underreport income more. Implications for survey design and for future research are drawn.